Delivers strong first quarter results
including mid-single digit organic Service
sales growth and high-single digit adjusted EPS growth
- 1Q Net sales up 0.2% and organic sales up 3.1% with GAAP EPS up
2.8% and adjusted EPS up 6.9%
- 1Q New Equipment orders up 8.8%; backlog up 4%, up 6% at
constant currency with growth in all regions
- 1Q Maintenance portfolio units were up more than 3%
- 1Q GAAP cash flow from operations of $504 million; free cash flow of $474 million, or 152% of net income
- Completed $200 million in share
repurchases and repaid $500 million
of debt
- Revised full year outlook1, including prior year
compares, to exclude Russia
business2...expect 2022 organic sales to be up 3 to 4%,
adjusted EPS of $3.22 to $3.27 and free cash flow1 of
~$1.6 billion
FARMINGTON, Conn., April 25,
2022 /PRNewswire/ -- Otis Worldwide Corporation
(NYSE:OTIS) reported first quarter 2022 net sales of $3.4 billion with 3.1% organic growth. GAAP
diluted earnings per share (EPS) increased 2.8% to $0.73 and adjusted EPS increased 6.9% to
$0.77.
"Otis delivered a strong first quarter with broad based growth
in New Equipment orders and maintenance portfolio units, nearly 6%
Service organic sales growth, 30 basis points of Otis adjusted
margin expansion and high-single digit adjusted EPS growth. In
addition, year-to-date, we have made progress on our capital
allocation strategy by successfully increasing our ownership in
Zardoya Otis that will result in its automatic delisting in early
May, repaying $500 million of debt
and returning cash to shareholders through $200 million in share repurchases and a more than
20% increase in our dividend," said Judy
Marks, Chair, CEO & President. "These achievements, and
the progress we are making on our ESG initiatives, demonstrate the
strength of our strategy, our ability to execute and the resilience
of our business. Looking ahead, despite the intensifying macro
challenges, including the impact from the crisis in Ukraine, we expect to achieve 3 to 4% organic
sales growth and 10% adjusted EPS growth, at the midpoint."
Key Figures
($ millions,
except per share amounts)
|
Quarter Ended March
31,
|
2022
|
|
2021
|
|
Y/Y
|
|
Y/Y
(CFX)
|
Net sales
|
$ 3,414
|
|
$ 3,408
|
|
0.2
%
|
|
3.2 %
|
Organic
sales
|
|
|
|
|
|
|
3.1 %
|
|
|
|
|
|
|
|
|
GAAP
|
Operating
profit
|
$
526
|
|
$
509
|
|
$
17
|
|
|
Operating profit
margin
|
15.4 %
|
|
14.9 %
|
|
50 bps
|
|
|
Net income
|
$
311
|
|
$
308
|
|
1.0 %
|
|
|
Earnings per
share
|
$
0.73
|
|
$
0.71
|
|
2.8 %
|
|
|
|
|
|
|
|
|
|
|
Adjusted non-GAAP
comparison
|
Operating
profit
|
$
542
|
|
$
533
|
|
$
9
|
|
$
29
|
Operating profit
margin
|
15.9 %
|
|
15.6 %
|
|
30 bps
|
|
|
Net income
|
$
329
|
|
$
312
|
|
5.4
%
|
|
|
Earnings per
share
|
$
0.77
|
|
$
0.72
|
|
6.9
%
|
|
|
First quarter net sales of $3.4
billion increased 0.2% versus the prior year, with a 3.1%
increase in organic sales.
First quarter GAAP operating profit of $526 million increased $17
million and adjusted operating profit of $542 million increased $9
million and $29 million at
constant currency from segment operating profit growth and lower
corporate costs. GAAP operating profit also benefited from lower
non-recurring separation costs. GAAP and adjusted operating profit
margin expanded 50 and 30 basis points to 15.4% and 15.9%,
respectively, driven by margin expansion in Service.
GAAP EPS increased 2.8% to $0.73
from operating profit growth and a reduction in share count
partially offset by a higher tax rate from the absence of one-time
items recorded in the prior year. Adjusted EPS increased 6.9% to
$0.77, driven by operating profit
growth, a reduction in share count and continued progress to reduce
the adjusted effective tax rate.
New Equipment
|
|
Quarter Ended March
31,
|
($
millions)
|
|
2022
|
|
2021
|
|
Y/Y
|
|
Y/Y
(CFX)
|
Net sales
|
|
$
1,422
|
|
$
1,458
|
|
(2.5) %
|
|
(0.6) %
|
Organic
sales
|
|
|
|
|
|
|
|
(0.5) %
|
|
|
|
|
|
|
|
|
|
GAAP
|
Operating
profit
|
|
$
93
|
|
$
104
|
|
$
(11)
|
|
|
Operating profit
margin
|
|
6.5 %
|
|
7.1 %
|
|
(60) bps
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted non-GAAP
comparison
|
Operating
profit
|
|
$
97
|
|
$
109
|
|
$
(12)
|
|
$
(14)
|
Operating profit
margin
|
|
6.8 %
|
|
7.5 %
|
|
(70) bps
|
|
|
In the first quarter, net sales of $1.4
billion decreased 2.5% with a 0.5% decrease in organic
sales. Organic sales growth of mid single digits in EMEA and low
single digits in Asia Pacific was
more than offset by declines in the Americas and China.
GAAP operating profit of $93
million decreased $11 million
and adjusted operating profit of $97
million decreased $12 million
as installation productivity and lower bad debt expense was more
than offset by $38 million of
commodity headwinds and the impact from lower volume. GAAP and
adjusted operating profit margin contracted 60 and 70 basis points
to 6.5% and 6.8%, respectively.
New Equipment orders were up 8.8% at constant currency with
growth in all regions. Americas New Equipment orders were up high
single digits, EMEA was up mid-teens and Asia was up mid-single digits, including low
single digit growth in China. New
equipment backlog increased 4% with 6% growth at constant currency
versus prior year.
Service
|
|
Quarter Ended March
31,
|
($
millions)
|
|
2022
|
|
2021
|
|
Y/Y
|
|
Y/Y
(CFX)
|
Net sales
|
|
$
1,992
|
|
$
1,950
|
|
2.2 %
|
|
6.0 %
|
Organic
sales
|
|
|
|
|
|
|
|
5.8 %
|
|
|
|
|
|
|
|
|
|
GAAP
|
Operating
profit
|
|
$
447
|
|
$
430
|
|
$ 17
|
|
|
Operating profit
margin
|
|
22.4 %
|
|
22.1 %
|
|
30 bps
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted non-GAAP
comparison
|
Operating
profit
|
|
$
457
|
|
$
440
|
|
$ 17
|
|
$
40
|
Operating profit
margin
|
|
22.9 %
|
|
22.6 %
|
|
30 bps
|
|
|
In the first quarter, net sales of $2.0
billion increased 2.2% with a 5.8% increase in organic
sales. Organic maintenance and repair sales increased 5.6% and
organic modernization sales increased 6.9%.
GAAP operating profit of $447
million and adjusted operating profit of $457 million each increased $17 million and $40
million at constant currency driven by higher volume,
favorable pricing and productivity, partially offset by labor
inflation. GAAP and adjusted operating profit margin each expanded
30 basis points to 22.4% and 22.9%, respectively.
Cash flow
|
|
Quarter Ended March
31,
|
($
millions)
|
|
2022
|
|
2021
|
|
Y/Y
|
Cash flow from
operations
|
|
$
504
|
|
$
585
|
|
$
(81)
|
Free cash
flow
|
|
$
474
|
|
$
541
|
|
$
(67)
|
Free cash flow
conversion
|
|
152 %
|
|
176 %
|
|
|
First quarter cash from operations of $504 million decreased $81
million versus prior year as higher GAAP net income was more
than offset by working capital improvements that were smaller than
prior year. First quarter free cash flow of $474 million decreased $67
million versus prior year.
2022 Outlook1
Otis is revising its full year outlook to exclude Russia2,3:
- Adjusted net sales of ~$14.1 to
14.3 billion, up 0.5 to 1.5%
- Organic sales up 3 to 4%
-
- Organic New Equipment sales flat to up 1.5%
- Organic Service sales up 5 to 6%
- Adjusted operating profit of $2.2
to $2.25 billion, up $40 to $90 million
at actual currency; up $105 to
$155 million at constant
currency
- Adjusted EPS of $3.22 to
$3.27, up 9 to 11%; adjusted
effective tax rate of approximately 27.7%
- Free cash flow of ~$1.6 billion
with conversion of approximately 120% of GAAP net income
1Note: When we provide outlook for organic sales,
adjusted operating profit, adjusted effective tax rate and free
cash flow on a forward-looking basis, a reconciliation of the
differences between the non-GAAP expectations and the corresponding
GAAP measures generally is not available without unreasonable
effort. See "Use and Definitions of Non-GAAP Financial Measures"
below for additional information.
2For the purpose of year-over-year comparisons, 2021 has
been adjusted to exclude Russia
when discussing outlook. Beginning in Q2 2022 Otis will report
adjusted results excluding Russia.
3Free cash flow and free cash flow conversion includes
Russia results.
About Otis
Otis is the world's leading elevator and
escalator manufacturing, installation and service company. We move
2 billion people a day and maintain more than 2.1 million customer
units worldwide, the industry's largest maintenance portfolio.
Headquartered in Connecticut, USA,
Otis is 70,000 people strong, including 41,000 field professionals,
all committed to meeting the diverse needs of our customers and
passengers in more than 200 countries and territories worldwide.
For more information, visit www.otis.com and follow us on LinkedIn,
Instagram, Facebook and Twitter @OtisElevatorCo.
Use and Definitions of Non-GAAP Financial
Measures
Otis Worldwide Corporation ("Otis") reports its
financial results in accordance with accounting principles
generally accepted in the United
States ("GAAP"). We supplement the reporting of our
financial information determined under GAAP with certain non-GAAP
financial information. The non-GAAP information presented provides
investors with additional useful information, but should not be
considered in isolation or as substitutes for the related GAAP
measures. Moreover, other companies may define non-GAAP measures
differently, which limits the usefulness of these measures for
comparisons with such other companies. We encourage investors to
review our financial statements and publicly filed reports in their
entirety and not to rely on any single financial measure. A
reconciliation of the non-GAAP measures (referenced in this press
release) to the corresponding amounts prepared in accordance with
GAAP appears in the attached tables. These tables provide
additional information as to the items and amounts that have been
excluded from the adjusted measures.
Adjusted net sales, organic sales, adjusted selling, general and
administrative ("SG&A") expense, adjusted operating profit,
adjusted net income, adjusted diluted earnings per share ("EPS"),
adjusted effective tax rate, adjusted remaining performance
obligation ("RPO"), constant currency and free cash flow are
non-GAAP financial measures.
Adjusted net sales represents net sales (a GAAP measure),
excluding significant items of a non-recurring and/or
nonoperational nature ("other significant items").
Organic sales represents consolidated net sales (a GAAP
measure), excluding the impact of foreign currency translation,
acquisitions and divestitures completed in the preceding twelve
months and other significant items. Management believes organic
sales is a useful measure in providing period-to-period comparisons
of the results of the Company's ongoing operational
performance.
Adjusted SG&A expense represents SG&A expense (a GAAP
measure), excluding restructuring costs and other significant
items.
Adjusted operating profit represents income from continuing
operations (a GAAP measure), excluding restructuring costs and
other significant items.
Adjusted net interest expense represents net interest expense (a
GAAP measure), adjusted for the impacts of non-recurring
acquisition related financing costs and related net interest
expense pending the completion of a transaction.
The adjusted effective tax rate represents the effective tax
rate (a GAAP measure) adjusted for other significant items and the
tax impact of restructuring costs and other significant items.
Adjusted net income represents net income attributable to Otis
Worldwide Corporation (a GAAP measure), excluding restructuring
costs and other significant items, adjusted net interest expense
and adjusted effective tax expense. Adjusted EPS represents diluted
earnings per share from attributable to common shareholders (a GAAP
measure), adjusted for the per share impact of restructuring and
other significant items.
Adjusted RPO represents RPO (a GAAP measure) excluding other
significant items.
Management believes that adjusted net sales, organic sales,
adjusted SG&A, adjusted operating profit, adjusted net income,
adjusted EPS, the adjusted effective tax rate and adjusted RPO are
useful measures in providing period-to-period comparisons of the
results of the Company's ongoing operational performance.
Additionally, GAAP financial results include the impact of
changes in foreign currency exchange rates ("AFX"). We use the
non-GAAP measure "at constant currency" or "CFX" to show changes in
our financial results without giving effect to period-to-period
currency fluctuations. Under U.S. GAAP, income statement results
are translated in U.S. dollars at the average exchange rate for the
period presented. Management believes that this non-GAAP measure is
useful in providing period-to-period comparisons of the results of
the Company's ongoing operational performance.
Free cash flow is a non-GAAP financial measure that represents
cash flow from operations (a GAAP measure) less capital
expenditures. Management believes free cash flow is a useful
measure of liquidity and an additional basis for assessing Otis'
ability to fund its activities, including the financing of
acquisitions, debt service, repurchases of common stock and
distribution of earnings to shareholders.
When we provide our expectations for adjusted net sales, organic
sales, adjusted operating profit, adjusted net income, adjusted
effective tax rate, adjusted EPS and free cash flow on a
forward-looking basis, a reconciliation of the differences between
the non-GAAP expectations and the corresponding GAAP measures
(expected diluted EPS from continuing operations, operating profit,
the effective tax rate, net sales and expected cash flow from
operations) generally is not available without unreasonable effort
due to potentially high variability, complexity and low visibility
as to the items that would be excluded from the GAAP measure in the
relevant future period, such as unusual gains and losses, the
ultimate outcome of pending litigation, fluctuations in foreign
currency exchange rates, the impact and timing of potential
acquisitions and divestitures, and other structural changes or
their probable significance. The variability of the excluded items
may have a significant, and potentially unpredictable, impact on
our future GAAP results.
Cautionary Statement
This communication contains
statements which, to the extent they are not statements of
historical or present fact, constitute "forward-looking statements"
under the securities laws. From time to time, oral or written
forward-looking statements may also be included in other
information released to the public. These forward-looking
statements are intended to provide management's current
expectations or plans for Otis' future operating and financial
performance, based on assumptions currently believed to be valid.
Forward-looking statements can be identified by the use of words
such as "believe," "expect," "expectations," "plans," "strategy,"
"prospects," "estimate," "project," "target," "anticipate," "will,"
"should," "see," "guidance," "outlook," "medium-term," "near-term,"
"confident," "goals" and other words of similar meaning in
connection with a discussion of future operating or financial
performance, the tender offer by Otis to acquire the remaining
issued and outstanding shares of Zardoya Otis, S.A (the "Tender
Offer") and the separation (the "Separation") from United
Technologies Corporation (now known as Raytheon Technologies
Corporation ("RTX")). Forward-looking statements may include, among
other things, statements relating to future sales, earnings, cash
flow, results of operations, uses of cash, dividends, share
repurchases, tax rates, research & development spend, credit
ratings, net indebtedness and other measures of financial
performance or potential future plans, strategies or transactions
of Otis in connection with the Tender Offer, statements that relate
to climate change and our intent to achieve certain environmental,
social and governance targets or goals, including operational
impacts and costs associated therewith, and other statements that
are not historical facts. All forward-looking statements involve
risks, uncertainties and other factors that may cause actual
results to differ materially from those expressed or implied in the
forward-looking statements. For those statements, Otis claims the
protection of the safe harbor for forward-looking statements
contained in the U.S. Private Securities Litigation Reform Act of
1995. Such risks, uncertainties and other factors include, without
limitation: (1) the effect of economic conditions in the industries
and markets in which Otis and its businesses operate in the U.S.
and globally and any changes therein, including financial market
conditions, fluctuations in commodity prices, interest rates and
foreign currency exchange rates, levels of end market demand in
construction, pandemic health issues (including COVID-19 and
variants thereof and the ongoing economic recovery therefrom and
their effects on, among other things, global supply, demand and
distribution), natural disasters, whether as a result of climate
change or otherwise, and the financial condition of Otis' customers
and suppliers; (2) the effect of changes in political conditions in
the U.S. and other countries in which Otis and its businesses
operate, including the effects of the ongoing conflict between
Russia and Ukraine and related sanctions and export
controls, on general market conditions, global trade policies and
currency exchange rates in the near term and beyond; (3) challenges
in the development, production, delivery, support, performance and
realization of the anticipated benefits of advanced technologies
and new products and services; (4) future levels of indebtedness,
capital spending and research and development spending; (5) future
availability of credit and factors that may affect such
availability, credit market conditions and Otis' capital structure;
(6) the timing and scope of future repurchases of Otis' common
stock ("Common Stock"), which may be suspended at any time due to
various factors, including market conditions and the level of other
investing activities and uses of cash; (7) fluctuations in prices
and delays and disruption in delivery of materials and services
from suppliers, whether as a result of COVID-19, the ongoing
conflict between Russia and
Ukraine or otherwise; (8) cost
reduction or containment actions, restructuring costs and related
savings and other consequences thereof; (9) new business and
investment opportunities; (10) the outcome of legal proceedings,
investigations and other contingencies; (11) pension plan
assumptions and future contributions; (12) the impact of the
negotiation of collective bargaining agreements and labor disputes;
(13) the effect of changes in tax, environmental, regulatory
(including among other things import/export) and other laws and
regulations in the U.S. and other countries in which Otis and its
businesses operate, including as a result of the ongoing conflict
between Russia and Ukraine; (14) the ability of Otis to retain
and hire key personnel; (15) the scope, nature, impact or timing of
acquisition and divestiture activity, the integration of acquired
businesses into existing businesses and realization of synergies
and opportunities for growth and innovation and incurrence of
related costs; (16) the ability to achieve the expected benefits of
the Tender Offer and the timing thereof; (17) the ability to
achieve the expected benefits of the Separation; (18) the
determination by the Internal Revenue Service and other tax
authorities that the distribution or certain related transactions
should be treated as taxable transactions; and (19) the amount of
our obligations and nature of our disputes that have or may
hereafter arise under the agreements we entered into with RTX and
Carrier Corporation in connection with the Separation. The above
list of factors is not exhaustive or necessarily in order of
importance. For additional information on identifying factors that
may cause actual results to vary from those stated in
forward-looking statements, see Otis' registration statement on
Form 10 and the reports of Otis on Forms 10-K, 10-Q and 8-K filed
with or furnished to the SEC from time to time. Any forward-looking
statement speaks only as of the date on which it is made, and Otis
assumes no obligation to update or revise such statement, whether
as a result of new information, future events or otherwise, except
as required by applicable law.
|
Otis Worldwide
Corporation Condensed Consolidated Statements of
Operations
|
|
|
|
|
|
Quarter
Ended
March
31,
|
|
|
|
(Unaudited)
|
(amounts in
millions, except per share amounts)
|
|
2022
|
|
2021
|
Net
Sales
|
|
$
3,414
|
|
$
3,408
|
Costs and
Expenses:
|
|
|
|
|
|
Cost of products and
services sold
|
|
2,408
|
|
2,389
|
|
Research and
development
|
|
37
|
|
35
|
|
Selling, general and
administrative
|
|
459
|
|
482
|
|
Total Costs and Expenses
|
|
2,904
|
|
2,906
|
Other income (expense),
net
|
|
16
|
|
7
|
Operating
profit
|
|
526
|
|
509
|
|
Non-service pension
cost (benefit)
|
|
—
|
|
2
|
|
Interest expense
(income), net
|
|
37
|
|
32
|
Net income before
income taxes
|
|
489
|
|
475
|
|
Income tax
expense
|
|
136
|
|
123
|
Net income
|
|
353
|
|
352
|
|
Less: Noncontrolling
interest in subsidiaries' earnings
|
|
42
|
|
44
|
Net income attributable
to Otis Worldwide Corporation
|
|
$
311
|
|
$
308
|
|
|
|
|
|
|
Earnings Per Share
of Common Stock:
|
|
|
|
|
|
Basic
|
|
$
0.73
|
|
$
0.71
|
|
Diluted
|
|
$
0.73
|
|
$
0.71
|
Weighted Average
Number of Shares Outstanding:
|
|
|
|
|
|
Basic shares
|
|
424.2
|
|
431.6
|
|
Diluted
Shares
|
|
427.7
|
|
433.7
|
Otis Worldwide
Corporation Segment Net Sales and Operating
Profit
|
|
|
|
Quarter Ended
March 31,
|
|
Quarter Ended
March 31,
|
|
|
(Unaudited)
|
|
(Unaudited)
|
(dollars in millions)
|
|
2022
|
|
2021
|
|
|
Reported
|
|
Adjusted
|
|
Reported
|
|
Adjusted
|
Net Sales
|
|
|
|
|
|
|
|
|
New
Equipment
|
|
$
1,422
|
|
$
1,422
|
|
$
1,458
|
|
$
1,458
|
Service
|
|
1,992
|
|
1,992
|
|
1,950
|
|
1,950
|
Consolidated Net Sales
|
|
$
3,414
|
|
$
3,414
|
|
$
3,408
|
|
$
3,408
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
|
|
|
|
|
|
New
Equipment
|
|
$
93
|
|
$
97
|
|
$
104
|
|
$
109
|
Service
|
|
447
|
|
457
|
|
430
|
|
440
|
Segment Operating Profit
|
|
540
|
|
554
|
|
534
|
|
549
|
General corporate
expenses and other
|
|
(14)
|
|
(12)
|
|
(25)
|
|
(16)
|
Consolidated Operating Profit
|
|
$
526
|
|
$
542
|
|
$
509
|
|
$
533
|
|
|
|
|
|
|
|
|
|
Segment Operating Profit Margin
|
|
|
|
|
|
|
|
|
New
Equipment
|
|
6.5 %
|
|
6.8 %
|
|
7.1 %
|
|
7.5 %
|
Service
|
|
22.4 %
|
|
22.9 %
|
|
22.1 %
|
|
22.6 %
|
Total Operating Profit
Margin
|
|
15.4 %
|
|
15.9 %
|
|
14.9 %
|
|
15.6 %
|
Otis Worldwide
Corporation Reconciliation of Reported (GAAP) to Adjusted
Operating Profit & Operating Profit Margin
|
|
|
|
Quarter
Ended
March
31,
|
|
|
(Unaudited)
|
(dollars in
millions)
|
|
2022
|
|
2021
|
|
|
|
|
|
New
Equipment
|
|
|
|
|
Net
sales
|
|
$
1,422
|
|
$
1,458
|
GAAP Operating profit
|
|
93
|
|
104
|
Restructuring
|
|
4
|
|
5
|
Adjusted New
Equipment Operating Profit
|
|
$
97
|
|
$
109
|
Adjusted operating
profit margin
|
|
6.8 %
|
|
7.5 %
|
|
|
|
|
|
Service
|
|
|
|
|
Net
sales
|
|
$
1,992
|
|
$
1,950
|
GAAP Operating profit
|
|
447
|
|
430
|
Restructuring
|
|
10
|
|
10
|
Adjusted Service
Operating Profit
|
|
$
457
|
|
$
440
|
Adjusted Operating
Profit Margin
|
|
22.9 %
|
|
22.6 %
|
|
|
|
|
|
Adjusted general
corporate expenses and other
|
|
$
(12)
|
|
$
(16)
|
|
|
|
|
|
Adjusted Total
Operating Profit
|
|
$
542
|
|
$
533
|
|
|
|
|
|
Total
Otis
|
|
|
|
|
GAAP Operating profit
|
|
$
526
|
|
$
509
|
Restructuring
|
|
14
|
|
15
|
One-time separation costs, net
|
|
2
|
|
9
|
Adjusted Total
Operating Profit
|
|
$
542
|
|
$
533
|
Adjusted Operating
Profit Margin
|
|
15.9 %
|
|
15.6 %
|
Otis Worldwide
Corporation Reconciliation of Reported (GAAP) to Adjusted
(Non-GAAP) Net Income, Earnings Per Share, and Effective Tax
Rate
|
|
|
|
Quarter
Ended
March
31,
|
|
|
(Unaudited)
|
(dollars in
millions, except per share amounts)
|
|
2022
|
|
2021
|
Adjusted Operating
Profit
|
|
$
542
|
|
$
533
|
Non-service pension
cost (benefit)
|
|
—
|
|
2
|
Net interest expense
1
|
|
32
|
|
32
|
Adjusted income from
operations before income taxes
|
|
510
|
|
499
|
Income tax
expense
|
|
136
|
|
123
|
Tax impact on
restructuring and non-recurring items
|
|
3
|
|
3
|
Non-recurring tax
items
|
|
—
|
|
17
|
Adjusted net income
from operations
|
|
371
|
|
356
|
Noncontrolling
interest
|
|
42
|
|
44
|
Adjusted net income
attributable to Otis Worldwide Corporation
|
|
$
329
|
|
$
312
|
|
|
|
|
|
GAAP net income
attributable to common shareholders
|
|
$
311
|
|
$
308
|
Restructuring
|
|
14
|
|
15
|
Zardoya Otis Tender
Offer finance costs 1
|
|
5
|
|
—
|
One-time separation
costs, net
|
|
2
|
|
9
|
Tax effects of
restructuring, non-recurring items and other adjustments
|
|
(3)
|
|
(3)
|
Non-recurring tax
items
|
|
—
|
|
(17)
|
Adjusted net income
attributable to common shareholders
|
|
$
329
|
|
$
312
|
|
|
|
|
|
Diluted Earnings Per
Share
|
|
$
0.73
|
|
$
0.71
|
Impact to
diluted earnings per share
|
|
0.04
|
|
0.01
|
Adjusted Diluted
Earnings Per Share
|
|
$
0.77
|
|
$
0.72
|
|
|
|
|
|
Effective Tax
Rate
|
|
27.8
%
|
|
25.9
%
|
Impact of
adjustments on effective tax rate
|
|
(0.5) %
|
|
2.8
%
|
Adjusted Effective
Tax Rate
|
|
27.3
%
|
|
28.7
%
|
|
|
1
|
Otis incurred interest
costs associated with financing the Zardoya Otis Tender Offer.
Interest expense for the current quarter is reflected as adjusted
without those costs.
|
Otis Worldwide Corporation Components of Changes in Net
Sales
|
|
|
Quarter Ended March 31, 2022 Compared with Quarter
Ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Factors Contributing to Total % Change in Net
Sales
|
|
|
Organic
|
|
FX
Translation
|
|
Acquisitions /
Divestitures,
net
|
|
Total
|
New
Equipment
|
|
(0.5)%
|
|
(1.9)%
|
|
(0.1)%
|
|
(2.5)%
|
Service
|
|
5.8%
|
|
(3.8)%
|
|
0.2%
|
|
2.2%
|
Maintenance and Repair
|
|
5.6%
|
|
(3.9)%
|
|
0.2%
|
|
1.9%
|
Modernization
|
|
6.9%
|
|
(3.4)%
|
|
—%
|
|
3.5%
|
Total Net
Sales
|
|
3.1%
|
|
(3.0)%
|
|
0.1%
|
|
0.2%
|
Components of New Equipment Backlog
|
|
Growth
%
|
|
|
Q1
2022
|
New Equipment Backlog
increase at actual currency
|
|
4%
|
Foreign exchange impact
to New Equipment Backlog
|
|
2%
|
New Equipment Backlog
at constant currency
|
|
6%
|
Otis Worldwide Corporation
Reconciliation of Adjusted Operating Profit at Constant
Currency
|
|
Quarter Ended March 31, 2022 Compared with Quarter
Ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
2022
|
|
2021
|
|
Y/Y
|
New Equipment
|
|
|
|
|
|
|
Adjusted Operating
Profit
|
|
$
97
|
|
$
109
|
|
$
(12)
|
Impact of foreign
exchange
|
|
(2)
|
|
|
|
(2)
|
Adjusted Operating
Profit at constant currency
|
|
$
95
|
|
$
109
|
|
$
(14)
|
|
|
|
|
|
|
|
Service
|
|
|
|
|
|
|
Adjusted Operating
Profit
|
|
$
457
|
|
$
440
|
|
$
17
|
Impact of foreign
exchange
|
|
23
|
|
|
|
23
|
Adjusted Operating
Profit at constant currency
|
|
$
480
|
|
$
440
|
|
$
40
|
|
|
|
|
|
|
|
Otis Consolidated
|
|
|
|
|
|
|
Adjusted Operating
Profit
|
|
$
542
|
|
$
533
|
|
$
9
|
Impact of foreign
exchange
|
|
20
|
|
|
|
20
|
Adjusted Operating
Profit at constant currency
|
|
$
562
|
|
$
533
|
|
$
29
|
Otis Worldwide
Corporation Condensed Consolidated Balance
Sheet
|
|
|
|
March 31,
2022
|
|
December 31,
2021
|
(amounts in
millions)
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,235
|
|
$
1,565
|
Restricted
cash
|
|
1,841
|
|
1,910
|
Accounts receivable,
net
|
|
3,262
|
|
3,232
|
Contract
assets
|
|
538
|
|
550
|
Inventories,
net
|
|
626
|
|
622
|
Other current
assets
|
|
342
|
|
382
|
Total Current Assets
|
|
7,844
|
|
8,261
|
Future income tax
benefits
|
|
311
|
|
335
|
Fixed assets,
net
|
|
757
|
|
774
|
Operating lease
right-of-use assets
|
|
542
|
|
526
|
Intangible assets,
net
|
|
397
|
|
419
|
Goodwill
|
|
1,636
|
|
1,667
|
Other assets
|
|
308
|
|
297
|
Total
Assets
|
|
$
11,795
|
|
$
12,279
|
|
|
|
|
|
Liabilities and
Equity (Deficit)
|
|
|
|
|
Short-term
borrowings
|
|
$
51
|
|
$
24
|
Accounts
payable
|
|
1,507
|
|
1,556
|
Accrued
liabilities
|
|
1,754
|
|
1,993
|
Contract
liabilities
|
|
2,930
|
|
2,674
|
Total Current Liabilities
|
|
6,242
|
|
6,247
|
Long-term
debt
|
|
6,694
|
|
7,249
|
Future pension and
postretirement benefit obligations
|
|
547
|
|
558
|
Operating lease
liabilities
|
|
386
|
|
336
|
Future income tax
obligations
|
|
261
|
|
267
|
Other long-term
liabilities
|
|
606
|
|
606
|
Total Liabilities
|
|
14,736
|
|
15,263
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
1,981
|
|
160
|
Shareholders' Equity
(Deficit):
|
|
|
|
|
Common Stock and additional paid-in capital
|
|
121
|
|
119
|
Treasury Stock
|
|
(925)
|
|
(725)
|
Accumulated deficit
|
|
(3,529)
|
|
(2,256)
|
Accumulated other comprehensive income (loss)
|
|
(696)
|
|
(763)
|
Total
Shareholders' Equity (Deficit)
|
|
(5,029)
|
|
(3,625)
|
Noncontrolling
interest
|
|
107
|
|
481
|
Total Equity
(Deficit)
|
|
(4,922)
|
|
(3,144)
|
Total Liabilities
and Equity (Deficit)
|
|
$
11,795
|
|
$
12,279
|
Otis Worldwide
Corporation Condensed Consolidated Statement of Cash
Flows
|
|
|
|
Quarter
Ended
March
31,
|
|
|
(Unaudited)
|
(dollars in
millions)
|
|
2022
|
|
2021
|
Operating
Activities:
|
|
|
|
|
Net
income from operations
|
|
$
353
|
|
$
352
|
Adjustments to reconcile net income to net cash flows
provided by operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
48
|
|
51
|
Stock compensation
cost
|
|
13
|
|
14
|
Change in:
|
|
|
|
|
Accounts receivable,
net
|
|
(51)
|
|
(14)
|
Contract assets and
liabilities, current
|
|
278
|
|
328
|
Inventories, net
|
|
(14)
|
|
(39)
|
Accounts payable
|
|
(36)
|
|
29
|
Pension contributions
|
|
(12)
|
|
(13)
|
Other operating activities, net
|
|
(75)
|
|
(123)
|
Net cash flows provided by
operating activities
|
|
504
|
|
585
|
Investing
Activities:
|
|
|
|
|
Capital expenditures
|
|
(30)
|
|
(44)
|
Investments in businesses and intangible assets, net of cash
acquired
|
|
(8)
|
|
(24)
|
Proceeds from sale of (investments in) marketable securities,
net
|
|
(7)
|
|
(18)
|
Other investing activities, net
|
|
28
|
|
36
|
Net cash flows used in
investing activities
|
|
(17)
|
|
(50)
|
Financing
Activities:
|
|
|
|
|
Increase (decrease) in short-term borrowings, net
|
|
26
|
|
(342)
|
Issuance of long-term debt, net
|
|
—
|
|
199
|
Payment of debt issuance costs
|
|
—
|
|
(2)
|
Repayment of long-term debt
|
|
(500)
|
|
—
|
Dividends paid on Common Stock
|
|
(102)
|
|
(87)
|
Repurchases of Common Stock
|
|
(200)
|
|
(300)
|
Dividends paid to noncontrolling interest
|
|
(33)
|
|
(32)
|
Other financing activities, net
|
|
(14)
|
|
(10)
|
Net cash flows provided by
(used in) financing activities
|
|
(823)
|
|
(574)
|
Summary of
Activity:
|
|
|
|
|
Net
cash provided by operating activities
|
|
504
|
|
585
|
Net
cash used in investing activities
|
|
(17)
|
|
(50)
|
Net
cash provided by (used in) financing activities
|
|
(823)
|
|
(574)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
|
(63)
|
|
(17)
|
Net
increase (decrease) in cash, cash equivalents and restricted
cash
|
|
(399)
|
|
(56)
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
3,477
|
|
1,801
|
Cash, cash equivalents
and restricted cash, end of period
|
|
3,078
|
|
1,745
|
Less: Restricted cash
|
|
1,843
|
|
20
|
Cash and cash
equivalents, end of period
|
|
$
1,235
|
|
$
1,725
|
Otis Worldwide
Corporation Free Cash Flow Reconciliation
|
|
|
|
Quarter Ended March 31,
|
|
|
(Unaudited)
|
(dollars in millions)
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
Net income attributable
to Otis Worldwide Corporation
|
|
$
311
|
|
|
$
308
|
|
Net cash flows provided
by operating activities
|
|
$
504
|
|
|
$
585
|
|
Net
cash flows provided by operating activities as a percentage of
net
income attributable to Otis Worldwide
Corporation
|
|
|
162 %
|
|
|
190 %
|
Capital
expenditures
|
|
(30)
|
|
|
(44)
|
|
Capital expenditures as a percentage of net income
attributable
to
Otis Worldwide Corporation
|
|
|
(10) %
|
|
|
(14) %
|
Free cash
flow
|
|
$
474
|
|
|
$
541
|
|
Free cash flow as a percentage of net income
attributable
to
Otis Worldwide Corporation
|
|
|
152 %
|
|
|
176 %
|
Media Contact
Katy Padgett
+1-860-674-3047
kathleen.padgett@otis.com
Investor Relations Contact
Michael Rednor
+1-860-676-6011
investor.relations@otis.com
View original
content:https://www.prnewswire.com/news-releases/otis-reports-first-quarter-2022-results-301531752.html
SOURCE Otis Worldwide Corporation